Borrower Default Notices Decline in April But Banks Pick Up Pace of Liquidation
Foreclosurernactivity nationwide declined in April, its incidence down both from Marchrnlevels and from foreclosure activity a year earlier according to RealtyTrac's Monthly U.S.rnForeclosure Market Report.
RealtyTracrnreported that 333,837 properties nationwide were subject to one of three forms offoreclosure filings in April, a 9rnpercent decline from March and 2 percent lower than activity in April2009. One in every 387 U.S. housing units received some type of foreclosurernfiling during the month.
The specific foreclosure metrics in decline are encouraging though;rndefault notices, an early step in the foreclosure process, are off 27rnpercent year over year while the final step of the foreclosure process, bankrn repossessions, set a new monthly record. A dramatic drop in initial filings and surge in bank repossessions may indicate the system is beginning to work through the problem.
RealtyTrac’s report incorporates documents filed in all three phases offoreclosure:
- Notice of Default (NOD) and Lis Pendens (LIS). This is the first legal notification from a lender that the borrower on a mortgage loan has defaulted under the terms of their mortgage and the lender intends to foreclose unless the loan is brought current.
- Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS andrn NFS); If the borrower does not catch up on their payments the lender will file a notice of sale (the lender intends to sell the property). This notice is published in local paper and contains information pertaining to the date, time and subject property address.
- Real Estate Owned or REO properties : “REO” stands for “real estate owned” and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.
Notices of Default and Lis Pendens were received onrn103,762 properties, a decrease of 12 percent from March, and as noted above, downrn27 percent from one year earlier.
Foreclosure auctions were scheduled for thernfirst time on 137,643 properties, a decrease of 13 percent from the peak that occurredrnin March when more than 158,000 auctions dates were set, but up 1 percent fromrnApril, 2009.
Bank repossessions (REOs)rnwere carried out on 92,432 properties in April, up only 1 percent from March but 45rnpercent above the number seen one year earlier. While April figures were only slightly above the previous high mark of 92,182, set inrnDecember 2009, this was still a record month for bank repossessions.
JamesrnJ. Saccacio, chief executive officer of RealtyTrac remarked on thispattern, saying, “There were twornimportant milestones in the April numbers that show foreclosure activityrn hasrnbegun to plateau – but at a very high level that will not drop off inthe nearrnfuture. April was the first month in the history of our report with anannualrndecrease in U.S. foreclosure activity. Secondly, bank repossessions, orREOs,rnhit a record monthly high for the report even while default noticesdroppedrnsubstantially on a monthly and annual basis. We expect a similarpattern to continue for most of this year, with thernoverall numbers staying at a high level and ripples of activity hittingthernvarious stages of the foreclosure process as lenders systematically workrnthrough the backlog of distressed properties.”
READ MORE ABOUT THE TIMING OF BANK OWNED REAL ESTATE LIQUIDATION AND ITS IMPLICATIONS ON THE HOUSING RECOVERY
As usual Nevada, Arizona, and Florida toppedrnthe list of states with high foreclosure activity. This was the 40th straight monthrnthat Nevada had the dubious distinction of being number one. One in every 69 housing units in the staternreceived a notice in April, more than five times the national average, and therernappears to be no end in sight. Overallrnactivity increased 10 percent since March and REO activity was up 57 percent.rnThere was virtually no change in activity since one year ago.
Even though Arizona moved from third to secondrnplace on the list of distressed states, overall activity was actually down 15rnpercent from March. One in every 169rnhousing units, more than twice the national average, received a notice. Activity was down about 1 percent from Aprilrn2009.
Floridarnposted the nation's third highest foreclosure rate, with one in every 182rnproperties receiving a foreclosure filing despite monthly (18 percent) and annualrn(25 percent) decreases in activity.
It is worth noting that California isrnappearing to stage a real turnaround. rnFalling activity in that state, where foreclosure activity was off 25rnpercent from March and 28 percent from April 2009, was one factor pushingrnArizona into second place on the list. 69,725rnhousing units received notices in California, still putting it in fourth placernon the list.
Other states with foreclosure rates ranking among the top 10 in Aprilrnwere Idaho, Michigan, Illinois, Georgia, Utah, and Colorado.
In sheer numbers, five states account for morernthan half of all foreclosure activity in the country; California, Florida,rnMichigan, Illinois, and Nevada had a total of 172,369 of the 333,837 filings inrnthe nation.
RealtyTrac is an Irvin California based company which bills itself asrnthe leading onlinernmarketplace of foreclosure properties. rnIts monthly report provides a count of the total number of propertiesrnwith at least one foreclosure filing entered into its database during the monthrnby type of filing. Data is collected from more than 2,200 counties nationwide, representingrnmore than 90 percent of the U.S. population.
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